Wednesday, 27 July 2016

Box office meltdown as Hollywood struggles to win back summer audiences

From Jaws (1975) to Jurassic Park (1993), few directors can rival Steven Spielberg in the blockbuster arena. But even Spielberg's magic touch couldn't save The BFG at the US box office.

On paper, the $140 million adaptation of Roald Dahl's beloved children's book, scripted by the late Melissa Mathison (E.T. The Extra-Terrestrial), had all the makings of a hit. Instead, the movie collapsed at the multiplexes, eking out less than $20 million in its opening weekend.

It is a staggering fall for one of cinema's highest flying talents – a director whose finger was affixed to the pulse of mainstream tastes for decades. Yet The BFG is only the latest high profile casualty in a summer that has seen a slew of big budget domestic bombs. Indeed, red ink has spilled out from such misses as Alice Through The Looking Glass, Warcraft, The Legend of Tarzan and Teenage Mutant Ninja Turtles: Out of the Shadows, each of which had production budgets north of $130 million, along with steep global marketing and distribution costs. The failures could cost their studios tens of millions of dollars.

More troubling is what the downturn may portend for the future of the film business and moviegoing overall.

"The theater business has weaker prospects going forward than at any time in the last 30 years," says media analyst Hal Vogel. "It's encountering visible strain this summer. It's a superhero, mega-blockbuster, tentpole strategy run amok. There's too much of it, and it's not working."

Those weak prospects will likely affect financing. Chris Spicer, Akin Gump entertainment and media partner, says investors may move away from film into other media, such as gaming or virtual reality. "They will look at financing opportunities in the broader media context," he argues.

There have been hits though, particularly for Walt Disney Pictures, with Pixar Animation Studios' Finding Dory and Marvel's Captain America: Civil War together racking up $1.8 billion worldwide.

Year to date, receipts are up 2%, thanks largely to winter hits such as Deadpool and Zootopia. Blockbuster season is a different story. Ticket sales are down roughly 10% this summer, but the slide is more precipitous than those numbers suggest. Rising ticket prices, fuelled by 3D, IMAX and other premium formats, have enabled the industry to paper over a huge gulf in attendance. On a per-capita basis, the moviegoing audience is at its lowest levels in nearly a century. Most disturbing, millennials are avoiding theatres altogether.

The audience of 18 to 39-year-olds has declined over the past five years, according to the Motion Picture Association of America.

"There are pockets of age groups and demographics that have not been inspired by what they're seeing in movie theaters," says Bud Mayo, president of Carmike Cinemas' alternative programming and distribution division. "With social media, the reaction time is instantaneous. If kids don't like it, word spreads."

As studios cater to fanboys, flooding theatres with superhero films and diving deeper into the comic book canon, the business becomes more niche. Frequent moviegoers, defined as those who go to theatres at least once a month, are responsible for nearly half of domestic revenue. In 2015, total tickets purchased by this group increased by 2.9 million, but the ranks of these habitual consumers fell by 3.7 million.

At the same time, TV and online content continues to be compelling, with production values that rival those on the big screen. For a new generation of cinephiles, Ned Stark being separated from his head on Game Of Thrones, or Walter White cooking meth in his underwear in Breaking Bad, are pop culture totems. Little of what is in multiplex cinemas has that kind of impact.

"There has been a shift in the way that people are consuming content, and it's moving away from the big screen," says Bruce Nash, founder of the box office tracking site The Numbers.

Producer Mike Medavoy says the box office malaise is symptomatic of the larger problem of engaging moviegoers who have a wide variety of alternatives, from Netflix to Pokémon Go. "I've been deeply concerned for a long time by the fact that there are so many other options besides movies," he says. "Millennials can play games or watch movies at home on a big screen, so repeating the same kind of content over and over [at the movie theater] doesn't really make sense. If you don't give people something that's fresh and new, they're not going to show up."

It is a looming disaster that has been more than a decade in the making. Much of it is self-inflicted, brought about by a mixture of greed and fear, aided by a profound and troubling lack of imagination. The consequences add up to a business that feels increasingly irrelevant.

What is clearly lacking is originality. So far, only one new blockbuster franchise has emerged out of the summer – Illumination Studios' The Secret Life Of Pets. Warner Bros' big budget bet, Suicide Squad, a hotly anticipated superhero movie, is tracking well, but it is not entirely new, springing from the DC Comics expanded cinematic universe.

Today, though, it is hard to predict which movies will resonate with audiences and which will be spurned. To safeguard against the vagaries of popular taste, studios have banked increasingly on sequels and spinoffs, with diminishing returns. That hasn't meant just cooking up new chapters in popular franchises, it means raiding the pop culture waste bin to revive mouldy, dimly remembered pieces of intellectual property.

20th Century Fox resurrected Independence Day (1996), only to find that audiences had little interest in revisiting the alien invasion story 20 years after it took the box office by storm. Likewise, Sony Pictures have been trying to reinvigorate Ghostbusters (1984) three decades after the paranormal investigators hung up their proton packs. But, as Variety critic Peter Debruge noted in his review of the new film, which debuted to middling receipts, Sony's female led relaunch "suffers from a disappointingly strong case of déjà vu" and lacks its own identity.

And that's not all: Studios have other pricey remakes in the works, including another Blade Runner (1982), a remake of Ben-Hur (1959), the umpteenth Spider-Man reboot, more XXX adventures, and a fourth Beverly Hills Cop. Spielberg also will return to the well, reuniting with a 73-year-old Harrison Ford on a fifth Indiana Jones film, despite the fact that the Indy outing, Indiana Jones And The Kingdom Of The Crystal Skull (2008), represented a low point for the series. Depending on your perspective, having Indiana Jones crack his bullwhip once more is either cinematic validation that seniors today lead longer, more active lives, or an indication of Spielberg and Ford's refusal to leave the stage gracefully.

X-Men: Apocalypse, My Big Fat Greek Wedding 2, and London Has Fallen are just a few of the high profile sequels that performed worse than previous instalments in their franchises.

Back in 2010, Walt Disney Pictures' Alice In Wonderland topped $1 billion globally, but six years later, the follow-up Alice Through The Looking Glass has made barely a quarter of that, and could result in a $100 million writedown. Other flops, such as Neighbors 2: Sorority Rising, Ride Along 2, and The Huntsman: Winter's War raise questions about the knee-jerk impulse to create sequels. Were these characters so beloved, and were their stories so rich, that audiences demanded part two?

"It may be a fantasy of mine as a creative producer, but I hope this will remind the studios that you could make five really good movies for the cost of one sequel to a movie that didn’t merit a sequel," says Matt Baer, producer of Unbroken (2014).

"The sequels that have the most trouble are those that try to hew too closely to the style and format of the originals", says one Hollywood producer. Independence Day: Resurgence, which merely upped the size of the alien invasion, left many audiences cold. While Marvel and Walt Disney Pictures' third Captain America outing, Joe and Anthony Russo's Captain America: Civil War, kept viewers craving more.

J.J. Abrams' Star Wars: Episode VII - The Force Awakens signalled to audiences months in advance that it would not just roll out Han Solo and Princess Leia again and hope for the best. This fresh take was announced in the trailer when a Storm Trooper not only pulled off his mask (itself a novelty), but also revealed a new character, played by John Boyega, showing the franchise's commitment to more diversity in casting.

Yet such new thinking has been the exception. Instead of pulling back with their sequels, studios continue to plough ahead, announcing follow-ups even before a first film hits theatres. Lionsgate, for example, plans to make seven Power Rangers movies – never mind that audiences won't get a peek at the rebooted version of the Mighty Morphin team until 2017.

After coming down with a case of Marvel envy, Warner Bros unveiled a sprawling DC Comics expanded cinematic universe, scheduled to deliver up to two superhero films a year through 2020. But things got off to a rocky start after Batman V Superman: Dawn Of Justice bowed to withering reviews and tepid fan reception – even though the film grossed $873 million worldwide, some say it needed to do more to justify the creation of sequels. Now, the studio must retune the engine in mid flight, promising to fix tonal issues on Justice League, its 2017 answer to The Avengers (2012).

Universal Pictures have been deeply engaged in its own universe building. The studio has tapped Alex Kurtzman and Chris Morgan to oversee the creation of intersecting monster movies featuring the likes of the Mummy and Dracula. Those films will begin rolling out next year.

As Walt Disney Pictures proved with Marvel, the rewards for getting it right can be limitless.

Hits spawn toy lines, theme park rides, stage shows, and many untold riches that come with success. However, the costs associated with launching these franchises is ever escalating, and the dangers of making a false move can be cataclysmic.

All is not equal at the box office. Fewer movies now account for a greater proportion of ticket sales. In 2015, five films were responsible for a staggering 25% of ticket sales. As media analyst Doug Creutz noted in a recent report, the top five films from 2000 to 2014 averaged 16% of grosses.

This year, the trend of a higher concentration of box office wealth is continuing. When a film hits, the rewards are huge. Halfway through 2016, six films have topped $300 million domestically – that's double the number that hit that milestone in all of 2014.

But as the highs get higher, the lows get lower. Though 2015 saw the two biggest domestic openings in history – the $248 million bow of Star Wars: Episode VII - The Force Awakens and the $209 million debut by Jurassic World – it also included some of the lowest grossing wide release bows in history. Victor Frankenstein, Burnt, We Are Your Friends, Jem And The Holograms, and Rock The Kasbah rank among the worst debuts for films released on more than 2,000 screens. This year, Hardcore Henry, a point-of-view thriller that sparked a bidding war at the Toronto Film Festival, joined their ranks.

The income gap is being felt in another way. Walt Disney Pictures spent more than $15 billion to snap up Pixar, Lucasfilm, and Marvel, giving the company the rights to Iron Man, Toy Story, Luke Skywalker, and scores of other iconic characters. That pop culture arsenal has allowed Disney to dwarf its rivals.

"They've had hit after hit this year," says Eric Handler, an analyst with MKM Partners. "It's incumbent on the other studios to up their game."

Walt Disney Pictures are responsible for four of the year's five highest grossing films. It has crossed the $5 billion mark at the box office at a record clip. And the Burbank studio's revenues tower over those of its big studio brethren – the company has gobbled up 31.3% of domestic market share. Its closest competitor, 20th Century Fox, commands roughly half that, with 16.9% of ticket sales.

If Disney were to rename its animated classic after the current studio scene, it would be "Snow White And The Six Dwarfs," Creutz quips, counting Lionsgate with the five other major studios.

That certainly raises questions about whether the business can continue to sustain this many studios. At the Sun Valley media conference earlier this month, Barry Diller, the former 20th Century Fox and Paramount Pictures chief, predicted that the movie industry will soon experience consolidation. "It will contract," he said.

"Each studio has the incentive to follow the formula of making sequels and tentpole films like Disney, even though, collectively, the strategy means further cannibalization, since audiences won't support the surfeit of big films coming to the cineplex", Creutz says.

He argues that by making a narrow range of films, the studios "have gotten themselves in the position that they are in, and really constrained the interest of the audience to go to the movies at all. They are essentially wrecking their own economics."

And it would appear to be lonely on the A-list. As the business focuses on comic book movies featuring masked avengers, the clout of the men and women who save the planet on screen has diminished. The club of actors and actresses who can open a movie with their name above the title has plunged in recent years. It is a group in the single digits, one whose members include Jennifer Lawrence (The Hunger Games), Robert Downey Jr. (Iron Man), and, maybe, Tom Cruise (Edge Of Tomorrow) and Will Smith (I Am Legend). With the exception of Lawrence, these actors are middle-aged and have been in the public eye since the 1980s and 1990s.

The bloodletting has continued in recent months too. Johnny Depp's days of commanding $20 million a picture evaporated when Alice Through The Looking Glass flatlined. Pairing Russell Crowe (Noah) and Ryan Gosling (Drive) in The Nice Guys and sending them on an extensive media tour failed to excite people about the R-rated comedy. And even Academy Award® winning Matthew McConaughey wasn't powerful enough to rescue Free State Of Jones.

From Dances With Wolves (1990) to The Passion Of The Christ (2004), the history of the movie business is rich with instances of stars using their box office prowess to bankroll challenging films that wouldn't otherwise see the light of day. Without star clout to get passion projects made, studios aren't taking big swings. That means many of the types of movies that have been held in the highest regard are nearly impossible to will into existence.

"Studios aren't making the kinds of films they made a decade ago, the ones that skewed toward adults," says Celine Rattray, an executive producer on American Honey and a producer on The Kids Are Alright.

Rattray cites Eye in the Sky, the drone thriller with Helen Mirren (The Queen) that became an art house hit, as an example of a business in transition. "I could have seen a studio making that 10 years ago," she says. "Now it has to be financed independently."

The Chinese movie business, though, has been a source of comfort within the industry's challenges. New theater construction and a burgeoning middle class have fueled explosive growth in the country, pushing ticket sales up nearly 50% last year. At some point in 2017, China is expected to pass the U.S. as the world's largest market for film.

That is a sign of the increasingly globalised nature of the business. But studios are ambivalent about China's rise. After all, Hollywood companies are getting only a small cut of the riches. Last year, China's ticket sales hit $6.8 billion, but that was driven largely by local productions. Even though foreign films – including those that Hollywood exports to China – racked up $2.6 billion, the Chinese government maintains such tight restrictions on outside content that studios received only 25% of receipts (half of what they get in the United States). That means their share of that record shattering year was just $650 million.

But there is hope. After a bruising start to summer, ticket sales have begun to rebound. The Secret Life Of Pets soared to a $104.4 million debut, and Suicide Squad and Jason Bourne could yet lift revenues, ending the popcorn season on a high note.

Their success will lift spirits, but the movie industry' issues are more systemic. It faces shifting tastes, increased competition, and a business model that seems to have been built for a different age. Breaking out of the rut will require bold, persistent experimentation, a willingness to change and ultimately fresh ideas.

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